The following press releases and news reports about China companies were carried on July 6. To view a full article or story, click on the link next to the headline.
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- Hon Hai (Taipei: 2317) Plans $1.5 Bln HK IPO for Foxconn Interconnect Technology Unit (English article)
- Wanda Group Announces 2016 H1 Results (company announcement)
- Berlusconi Close to Selling AC Milan to Chinese Buyers (English article)
- Nevada Official Skeptical on LeEco (Shenzhen: 300104) Financing Plan for Car Plant (English article)
- Alibaba (NYSE: BABA) Buys App Store Wandoujia, Founder to Remain (Chinese article)
For a company of its size, Apple (Nasdaq: AAPL) has been surprisingly conservative about its investments in China, opening just a few of its trademark stores in a country that is already one of its top global markets but otherwise making few major investments. But that could soon change with talk that the world’s biggest tech company is aiming to open a research and development center in China, which has become an unspoken prerequisite for any company that hopes to successfully do big business in the country. Apple clearly needs to think about such high-profile, big investments in China if it ever wants to streamline some of the bureaucracy that has kept some of its most popular products out of the market for months after their global launches.
I’m going to do something today I don’t usually do and comment on an interesting report that appeared on a Chinese website that has since been removed regarding a potential massive investment by Apple (Nasdaq: AAPL) in Taiwanese electronics giant Hon Hai (Taipei: 2317), one of its biggest iPhone manufacturing partners. The reason for my exception is that the deal sounds extremely intriguing and makes lots of sense in the current climate, even though removal of the article and lack of similar reports in western media make me suspicious of whether anything is really happening. But let’s move past all this discussion and look at the report itself, which said that Apple was preparing to make a massive $9.76 billion investment in Hon Hai, which was going to issue new shares in the form of global depositary receipts (GDRs) to make Apple its second largest shareholder. Hon Hai currently has a market capitalization of about $40 billion, meaning an investment that size, presuming it was new shares, would make Apple the owner of about 20 percent of Hon Hai’s shares. Again, I want to emphasize I have serious doubts about whether such a deal is actually being discussed for the reasons I previously mentioned. But at the same time, I really do believe that such a deal makes lots of sense for both Apple and Hon Hai for many reasons. From a cash standpoint, the investment would represent a minor amount of money for Apple, which has so much cash at this point, around $100 billion to be exact, that it took the unusual step last month of restoring a dividend for shareholders after a 17 year gap, and also said it would buy back another $10 billion worth of its stock. (
You know your industry is starting to mature when a big player like Hon Hai (Taipei: 2317), the massive Taiwanese electronics maker of everything from PCs to iPhones, steps in to the picture, a move that should come as both a relief but also a worrisome development for the troubled solar cell sector. Foreign media are reporting that Hon Hai unit Foxconn Technology (Taipei: 2354) is building a massive new solar cell plant in China’s Jiangsu province, adding a major player to a sector already struggling with large overcapacity that has caused prices to tumble by more than 60 percent this year alone and driven nearly every company into the red as their stocks hover near all-time lows. (
Investors must see something I’m missing in Lenovo’s (HKEx: 992) newly announced $300 million joint venture with Taiwanese contract PC manufacturer Compal (Taipei: 2324). That’s the only reason I can find for an 11 percent jump in Lenovo’s stock on Tuesday after it announced the deal, which will see it pair with one of Taiwan’s top contract PC makers in a new manufacturing tie-up. To me, this deal looks more like a step backward than a positive new development, and goes in the opposite direction of global industry trends. First let’s review the facts: under their new deal, the companies will invest the $300 million to build a PC manufacturing plant in the Chinese city of Hefei. Presumably the plant will exclusively supply PCs to Lenovo, which recently passed Taiwan’s Acer (Taipei: 2353) to become the world’s third largest PC seller (
from that part of China, which has also seen neighboring cities like Xian and Chongqing grow quickly as China offers strong incentives for companies to set up shop in its relatively underdeveloped western interior. As a longtime tech writer, I’ve been particularly impressed with Chengdu, which seems to have a strong ability to attract some of the world’s top-tier technology names to the city with its abundance of college graduates, good transport networks and of course its tasty Sichuan food. Intel (Nasdaq: INTC) was one of the earliest players in the city when it set up a chip manufacturing plant there seven years ago, and Texas Instruments (NYSE: TXN) opened up shop in the city last year when it took over a plant from SMIC (HKEx: 981; NYSE: SMI). Most major PC players have also opened plants there in the last 2-3 years, including both Hewlett Packard (NYSE: HPQ) and Dell (Nasdaq: DELL), (
